Valuing an Urgent Care
With the recent pandemic, urgent care facilities have seen varying levels of demand. Hence, we have seen a spike in the buying and selling of urgent care facilities. Whether you plan on selling an urgent care or plan on buying an urgent care, it is important to understand the fair market value of an urgent care.
There are many factors that impact the value of an urgent care. As a business appraiser, Peak Business Valuation, works with dozens of individuals who are buying or selling an urgent care. The first step in doing so is obtaining a business valuation. As part of a valuation engagement, we discuss some of the key factors used in valuing an urgent care. Keep in mind the below factors are only a guide. For more specific information about valuing an urgent care you are looking to buy or sell, schedule your free consultation with Peak Business Valuation.
Market Multiples for an Urgent Care
- SDE Multiple Average: 2.4x – 4.22x
- EBITDA Multiple Average: 3.0x – 5.58x
- REV Multiple Average: 0.6x – 0.9x
** Disclaimer: These multiples have been provided for educational purposes only. Multiples are based on companies with revenues between $1-$5 million. As such, the information provided does not constitute valuation advice and should not be acted as such. These multiples do not represent the valuation opinion of Peak Business Valuation or any of its valuation professionals. Instead, you should seek the guidance and advice of a qualified business valuation professional with respect to any matter contained in this article.
Most often an urgent care is valued using EBITDA or SDE multiples – cash flow multiples. By increasing your understanding of what your urgent care center is worth, you can begin to take steps to increase the value of your urgent care. This is helpful whether you are expanding your urgent care, acquiring a new urgent care, or want to maximize the value of your urgent care facility before selling. Here are a few ideas to help increase your urgent care center’s value. If you are searching for a more extensive valuation, schedule a free consultation with Peak Business Valuation.
Key Success Factors
Peak Business Valuation, business appraiser, values urgent care centers on a regular basis. Below are several success factors that can help distinguish your urgent care and increase the value of an urgent care.
The payor mix for an urgent care center is a critical component when valuing an urgent care. Commercial insurance is preferred over that of government insurance and all cash patients. In general, urgent care centers typically have a higher commercial payor mix compared to traditional primary care practices. Private/commercial insurance typically reimburse higher than government insurance payors such as Medicare and Medicaid. Patients without insurance typically receive a discount of 15-20%.
Urgent care centers can be staffed with either physicians or physician assistants/nurse practitioners. Many urgent care centers seek to always have a physician on staff. However, an increasing number of urgent care clinics are using physician assistants and nurse practitioners for coverage instead. Doing so reduces overhead staffing costs significantly. The cost of physician assistants and nurse practitioners is nearly 57% and 55%, respectively, of the average physician hourly salary. Utilizing PA’s and NP’s typically results in higher operating margins for the business.
Patient Visit Volume & Net Revenue per Visit
A valuation expert will also analyze the patient visit volume and net revenue per visit. The higher the volume with higher net revenue per visit will maximize the value of an urgent care clinic. The busier an urgent care center is the more profitable it can be. When assessing these metrics, a valuation expert will compare them to other similar urgent care clinics.
Impact of COVID-19
Many urgent care centers have seen a negative impact by COVID-19. The decline in volume at urgent care centers can be attributed to several factors. With the recent pandemic, there has been an increased demand for individuals in the medical field. This increased demand has led to increased compensation costs. As more individuals are staying home, there has been a decrease in minor injuries, viral or bacterial infections, among others. An increase of telemedicine options has also increased access for individuals with minor injuries to consult with a physician via the comfort of their home. Urgent care centers that embraced COVID-19 testing at their facility have not seen as dramatic of an impact. As well as those centers that have added telemedicine offerings.
Last, the location of an urgent care clinic can play a significant role in the value of an urgent care. The more accessible and convenient the urgent care is the higher volume of clients in can have. Busier urgent care centers are typically located in high-traffic areas such as shopping or retail centers. A valuation expert will also consider the concentration of other urgent care clinics in the area. Urgent care clinics with multiple locations can typically combine management and overhead costs which can increase the overall operating margin.
There are many important considerations when valuing an urgent care. Understanding the value of an urgent care is important whether you are looking to buy, sell, or grow an urgent care clinic. Obtaining a business valuation can help you understand the fair market value and identify opportunities to grow to maximize the value of an urgent care clinic.
Peak Business Valuation, business appraiser, has valued urgent care facilities across the country. We are happy to answer any questions you may have about understanding the value of an urgent care. You can reach out via email or by scheduling your free consultation below.
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